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Q:  “I represent a seller and have learned that the next-door neighbors to the property operate a daycare for adults with disabilities out of their home. Do I have an obligation to disclose that fact? What if a prospective buyer notices vehicles coming and going from the property next door and asks me about it–would I be obligated to disclose then?”

A:  A real estate licensee representing a seller has an affirmative obligation to disclose all known material adverse facts pertaining to the physical condition of the property. Here, whether the fact is material or adverse could be subject to interpretation. However, as the presence of an adult daycare next door does not relate to the property’s physical condition, there would not be an affirmative obligation to disclose. If a prospective buyer were to inquire about what sort of business was being run by the neighbors, there would still be an ethical obligation under Article 1 of the NAR Code of Ethics to answer honestly. 

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